In the News

Obama Administration Announces New Options for Consumers With Canceled Plans

December 20, 2013 — The Obama administration on Thursday announced a pair of rule revisions for consumers whose health plans have been canceled because they do not meet minimum coverage requirements under the Affordable Care Act (PL 111-148), the New York Times reports (Pear, New York Times, 12/19).

Under the changes, consumers affected by the cancellations will be allowed to claim "hardship exemption" status, which will allow them to avoid the law's individual mandate penalty next year if they do not have coverage.

In addition, consumers of any age who are affected by the cancellations will be allowed to purchase bare-bones catastrophic coverage (Alonso-Zaldivar, AP/Yahoo! News, 12/20). According to the Times, such coverage typically is available through the ACA's health insurance marketplaces only to people who are younger than age 30 or qualify for a hardship exemption (New York Times, 12/19).

The announcement of the changes came one day after six Democratic senators sent a letter to HHS Secretary Kathleen Sebelius calling on the department to roll out a more far-reaching solution to the cancellation problem than the one President Obama unveiled in November (Goldstein, Washington Post, 12/19). Under Obama's plan, insurers in 2014 would be allowed to continue to sell policies even if they do not meet minimum coverage requirements under the ACA (Women's Health Policy Report, 11/14).

The senators urged Sebelius to allow affected consumers to claim the hardship exception and buy the bare-bones plans. Hours before the new relaxed rules were announced Thursday, Sebelius told the senators in a letter that the administration would issue the second fix (Washington Post, 12/19). Sebelius added that a dedicated phone line would be established to connect consumers whose policies have been canceled with call center assistance (AP/Yahoo! News, 12/20).

In a statement released Thursday night, the six senators said they are "pleased" about the administration's response to their concerns, adding, "We will closely monitor how the administration implements this option, and we remain committed to proposing responsible solutions" (Washington Post, 12/19).

According to the Times, HHS notified consumers of the changes in a separate bulletin and "broadly defined" who would be eligible to benefit from the relaxed rules (New York Times, 12/19). It is unclear how many people will choose to take up the offer of purchasing the catastrophic coverage plan, the Washington Post reports (Washington Post, 12/19).

Meanwhile, America's Health Insurance Plans President and CEO Karen Ignagni said the "latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers" (New York Times, 12/19).

Fewer Than 500K Still Lack Coverage After Plans Canceled

In related news, the Obama administration on Thursday said fewer than 500,000 individuals whose plans have been canceled under the law had yet to find alternative coverage, the AP/U-T San Diego reports. According to the AP/U-T San Diego, more than four million people received notifications that their coverage would be canceled (Pace, AP/U-T San Diego, 12/19).

According to four federal health officials who spoke on condition of anonymity, the majority of consumers whose plans have been canceled have automatically been enrolled in new plans by their insurers, been allowed by state regulators to keep their existing coverage under Obama's administrative fix or selected an alternative option presented by insurers.

USA Today reports that the newly released figure counters claims by some conservatives that more U.S. residents will lose coverage by Jan. 1 than will be newly insured (Kennedy, USA Today, 12/19).

Meanwhile, the federal officials said the figure could decline over the next few days as more individuals might sign up for coverage by the Dec. 23 deadline for coverage that begins on Jan. 1 (AP/U-T San Diego, 12/19).

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